Bucharest Court OKs City Mall Owner’s Insolvency

Victoria Holdings asked the court for insolvency last week, after the company's shareholders announced difficulties in reimbursing a EUR40 million bank loan.

Last month, Victoria Holdings, a unit of Australia's APN European Retail Trust fund, announced to have difficulties in repaying a EUR40 million debt to Bank Austria, maturing in November, and that it started to renegotiate the loan terms with the bank.

The investment fund needs to return EUR40 million by November from a loan contracted from Bank Austria (a unit of the Italian banking group UniCredit). APN European Retail Trust bought the Bucharest-based shopping center in 2006 for EUR103.5 million.

The shopping mall was evaluated mid-2010 at EUR35.4 million, 31% less than in June 2009. Thus, considering the 2006 purchase price, City Mall lost 66% of its value.

Victoria Holdings' parent company, APN, will only cover EUR10 million, or 25% of the debt, according to the October report.

Australian APN European Retail Trust posted revenues of EUR308,000 from City Mall rentals in the first half this year, ten times less than the revenues posted in the same interval of 2009. The sharp decline is mostly explained through lowered rents and contract terminations.

The mall's occupancy rate dropped to 80% in June, from 90% a year earlier.

City Mall has an overall surface of 38,000 sqm, including an overall 19,000-sqm rentable area. The unit was launched four years ago, following an investment of EUR35 million.

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